The NHS: how £5.4bn = £0.6bn

by Stephen Tall on March 9, 2006

A sobering analysis from Reform today notes how the £5.4 billion of extra tax-payers’ money being poured into the NHS next year, 2006-07, will dwindle to £0.6bn available to spend on patient care.

£3.8bn (70%) of it will be swallowed by inflation, while a further £1bn (19%) will be needed to plug this year’s anticipated NHS deficit. Which means just 11% of that whacking great increase will be spent on front-line services.

Mind, all that seems a picnic compared with the £7bn deficit they are predicting for 2010.

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£3.8bn on the average NHS payrise this year of just over inflation would mean a current wage bill of well over £125bn. That can’t be right can it? So maybe it’s even worse than that – that effectively some of that £3.8bn is for previous years’ salary inflation too. It’s all pretty astonishing though.

by Jock Coats on March 10, 2006 at 12:06 am. Reply #

I don’t think this analysis is entirely fair. Healthcare costs escalate – wages rise in line with wages, ahead of inflation. And new expensive drugs are constantly coming out.

So the £3.8bn is best described as cuts averted by increased funding, rather than suggesting that the money is wasted.

Whether we seek to control costs, or provide new treatments like Herceptin is a policy choice which should be made by accountable people. Instead we expect health authorities to do both and damn them when they don’t.

by Joe Otten on March 10, 2006 at 8:58 am. Reply #

I’m not damning the health authorities, Joe.

But the figures are worrying. The money currently being pumped in will slow after 2008. What then?

Not too sure I accept your binary of either controlling costs or providing new treatments (but I don’t think you meant it quite like that?).

And I didn’t/wouldn’t use the word ‘wasted’… Whether recent cash injections have been spent as well as they could have been by all health authorities is a more moot point.

by Stephen Tall on March 10, 2006 at 10:28 am. Reply #

we need to spend a higher share of GDP on Health its as simple as that. The recent rises were always going to “wasted” in the sense it addresses 20 years of poor pay and infrastructure investment. these were never going to deliver massive output gains but were desperately needed. If add in an ageing population, drug inflation and inovation and the recent waiting list reductions and thats your money gone. Its one of the reasons i think the tory policy of splitting GDP groth between services and tax cuts is wrong. we are going to need every penny for the NHS.

by Cllr David Morton on March 12, 2006 at 12:52 am. Reply #

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